Citygate Automotive profit decline 2022 brand challenges used car prices

author: FutureCar Staff    

Car dealer group Citygate Automotive experienced a decline in profits of £2m in 2022, according to its annual results for the 12 months ending December 31, 2022. The company reported a profit before tax of £7.4m, compared to £9.4m in the previous year. Despite this, turnover increased from £336.3m to £362.4m, and gross profit also saw a £2m increase from £51.2m to £53.2m.

In its annual results submitted to Companies House, Citygate Automotive noted that many of its brands had lost market share in the new car market. While profit on new vehicles improved, it was offset by a decline in profit from used cars. The number of new and used car units sold also decreased, with 6,243 new cars sold (down 541 from the previous year) and 6,506 used cars sold (down 382).

The board of Citygate Automotive stated that the Volkswagen, Seat, and Skoda brands were particularly affected by the semiconductor crisis, which disrupted the supply of new vehicles and led to a loss of market share. On the other hand, the Kia brand experienced growth, with registrations reaching a record 100,200 vehicles and market share increasing to 6.2%. In the light commercial vehicle segment, there was a decline of 20.6% to 282,000 units, but VW Commercial Vehicles outperformed the market and grew its market share to 10.0%, becoming the second largest brand in the market.

Despite the challenges, Citygate Automotive saw positive developments in other areas. Service hours and bodyshop hours increased, and parts turnover rose by £1.9m. The company's strategic report highlighted a 7.7% growth in turnover to £362.4m. In vehicle sales, higher average prices offset the decline in both new and used car volumes. Aftersales also performed well, with service hours up 2.1%, bodyshop hours up 21.7%, and parts revenue up 15.5%. The supply constraints on new vehicles and the favorable mix of new products contributed to improved gross profit on new vehicle sales. However, this was overshadowed by a significant decline in used car profitability as the market returned to a more normal level after the post-pandemic surge in prices in 2021.

While aftersales profitability increased by 13% year-on-year, the combined gross margin declined by 50bps to 14.7%. Distribution expenses rose by £1.8m to £26.9m, mainly due to increased staff and vehicle costs. Administration costs also increased by £2.6m to £20.5m, driven by ongoing investments in IT projects aimed at digitizing processes and increasing operational efficiency.

Overall, Citygate Automotive faced challenges in the new car market, but saw growth in other areas such as aftersales and parts turnover. The company remains focused on adapting to market conditions and investing in technological advancements to drive future success.

Pictured top: Citygate Volkswagen West London

FutureCar Staff